A consortium of the Indonesian state-owned PT Aneka Tambang (Antam) and three foreign companies will develop a US$4.6 billion nickel smelting plant in Weda Bay, Halmahera, North Maluku.
Chairman of the Indonesian Investment Coordinating Board (BKPM), M. Luthfi, said Wednesday PT Antam and foreign companies from Western Europe and Japan had managed to secure financing for the smelting project.
“It’s a big project. It’s in the final stage and hopefully, Antam and partners will start the development later this year,” Luthfi said after speaking on the second day of the 33rd annual convention and exhibition of the Indonesian Petroleum Association (IPA) on Wednesday.
However, he declined to mention the identities of the foreign business partners since the consortium is still finalizing business procedures.
Halmahera operates a nickel mining concession belonging to PT Weda Bay Nickel, 90 percent owned by listed French company Eramet, a world leading producer of metal alloys, and 10 percent by Antam, a firm specializing in mining.
The Weda Bay deposit is one of the largest undeveloped nickel projects in the world, with an updated estimated reserve of 5.1 million tons of measured and inferred ore resources.
An Eramet press release last February stated that the volume of nickel ore anticipated from the Halmahera project would enable it to almost double its nickel production, with a total targeted annual capacity of up to 65,000 tons of nickel.
Currently, PT Inco is the largest nickel producer in the country with targeted production this year of around 79,000 tons. But due to weakening prices, this production target could be reduced this year.
Last February, Eramet announced that it had agreed to sell 33.4 percent of its stake in the Weda Bay mining project to Mitsubishi Corporation, Japan’s largest general trading company with over 200 commercial operations in approximately 80 countries worldwide.
The Weda Bay smelting plant project will be the first in the country as the one planned by PT Inco and PT Antam in Pomalaa, Southeast Sulawesi, has been cancelled recently. “The feasibility study by a number of independent consultants show that the project is not feasible commercially,” said Jannus T. Siahaan, the chief spokesman of the Canadian based Inco Limited.
According to Luthfi, in addition to the Weda Bay smelter project, there are several other large investment projects upcoming, including oil refineries and energy projects, requiring $7.6 billion of new investment.
“These are huge [investments], considering that we are still in a global crisis that has cut the availability of investment capital in the world market,” he said, adding that the new investments would include geothermal energy and oil refineries.
Luthfi noted Indonesia would still attract 9 percent growth in inward investment this year. BKPM had targeted 12 percent growth in investment for 2009 but the figure was revised down to 9 percent to take account of the global financial crisis. Even so the total was still expected to reach about $17 billion.
Last year, inward investment grew by about 16 percent with the cumulative total amount reaching $16 billion, from $13.9 billion in 2007.